Happy new year! I'm new to Bay Area real estate investment and have been looking at a few up and coming areas for SFH to either rent to hold or flip. East Palo Alto has gone up a lot given the huge reduction in crime and proximity to Facebook etc. San Jose looks set to benefit from Google's plans to expand there. Redwood City is doing well too. Newark is expanding as a cheaper gateway to the peninsula. SFH are generally in a price range of $700k-$1m which whilst crazy, are much more affordable with reasonable commute times than other parts of the area.
Appreciate community thoughts on how best to compare these or other areas for investment and strategies/experiences that folks have had.
I think there are several things to consider when evaluating markets to flip or hold. For rentals it depends if you are looking for cashflow or appreciation. There are several areas in the bay where you can get some cashflow, but these are typically cheaper areas - between Sacramento and the 580 corridor and some parts of the southbay, typically farther from city center. If you are willing to be cashflow neutral and possibly get some appreciation, this expands possible investment areas, however the most money is made in areas with high appreciation, if you can afford it.
For flips, I would typically look in areas where there are older, smaller properties. Projects can be found all over, but the highest barrier is the cash to initially purchase and rehab the properties.
EPA has been a long time coming, since Ikea moved in the area really started to turn. I would expect the peninsula to do better than the east bay, but theres still money to be made in both locations. I don't have much advice for the next place that will explode, I wouldn't recommend betting on this as a strategy.
My guess is the biggest barrier that would limit you is finances and locale.
Best of luck
Thanks Jeremy. Yes, I agree the Peninsula will do better than East Bay for SFH.
Ratesh, I spend my life dealing with this. 95125 and 95126 zip codes, as well as downtown San Jose have appreciated 20% since June when Google made the announcement. The inventory is historically low and the competition unbelievable, often with 20 offers on everything for sale, South San Jose has increased almost as much but there are still some opportunities there. Blossom Valley is probably one of the better places for rental properties, if you can beat out other buyers. My belief is that Morgan Hill and Gilroy are the places to invest right now in the south bay. There is a lot of newer construction that makes for great rental properties under a million dollars. All the tech companies are going to downtown SJ which makes the commute from Morgan Hill to downtown no worse than the commute from South San Jose to Cupertino/Sunnyvale/Mountain was. The other place where there are good opportunities is Oakland in some of the more walkable neighborhoods like Temescal or NOBE. Millennials love to live there and homes are still relatively affordable for investors.
Thanks Marcy. I took a quick glance at the new places in Gilroy/Morgan Hill and they are about the same price as San Jose/EPA around $800K which sounds way over priced to me! Granted, they are new but the location is not comparable IMO.
Ratesh, 800K in San Jose gets you an older home in Alum Rock right now and a newer home in Gilroy. It no longer will get you a single family home in Blossom Valley. It will get you a condo in San Jose, but possibly not 2 bedrooms in downtown. The reason I like Morgan Hill Gilroy right now is because I believe that there is a really great chance for appreciation as other areas south of downtown San Jose have already gotten unaffordable and the inventory is so low. Another great area for rental is Santa Cruz. The prices are lower than Silicon Valley and the rents as high with a vacancy rate of 1.67%.
I like the Tri-Valley for SFH. Pleasanton, Dublin, and San Ramon. The houses are larger and in some cases new construction. Its close to Bart, the schools are good, and it gives a person the ability to commute to the South Bay or SF. As prices continue to climb in the South Bay and pricing many families out. I am seeing more and more people move to the Tri-Valley.